Builders Don't Get Bail Out, So They "Bail" On Congress
Late yesterday afternoon--amid many email releases from National Association of Home Builders, which is holding its annual convention in Orlando-- came THIS statement from the NAHB President:
Today, the National Association of Home Builders' Political Action Committee, BUILD-PAC, and its 150-member Board of Trustees representing all 50 states, agreed to cease all approvals and disbursements of BUILD-PAC contributions to federal congressional candidates and their PACs until further notice.
Why? The Board of Trustees felt that over the past six months Congress and the administration have not adequately addressed the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward.
At first I thought, ok, they’re making a statement, but what lawmaker is really going to care? Until I called the Center for Responsive Politics and found that the NAHB was the 3rd most generous contributor to Congressional candidates in the last election cycle (the Realtors are #1, by the way). Builders gave about $3 million to candidates in 2006, 73 percent of it to Republicans. That ain’t chump change, so that's more than a statement.
So today, as I cover President Bush’s signing of the stimulus package, which includes an unprecedented and controversial temporary boost in GSE and FHA loan limits, I have to wonder: Why are the builders so angry? They did not get the loss carry back provision the big public builders really wanted, given their huge losses, but they did get some other business tax breaks. I know they’re pushing for full FHA reform, and that’s in the works.
The administration has been pushing all kinds of plans to get lenders to help troubled borrowers and stem the tide of foreclosures--hopefully saving some additional homes from going on the already glutted market. But it has stopped short of a government bailout. I have to go back to the tax break and surmise that this is the builders saying, 'you didn't give us the big tax break we wanted, so we're not going to pay you anymore.' Some, including a colleague in my office, thinks that's absolutely valid.
Since this is my blog, I’m obviously allowed to offer my opinion, and I want to say to the NAHB, which will likely not like my opinion, that it is just that: opinion. Feel free to refute and I’ll gladly post it. I am not anti-builder. I pitched my current beat because I fundamentally love houses and all that goes into them.
But here goes: Given everything the government has done so far, why do we taxpayers have to give more to an industry that is suffering due to a mistaken vision of the market it serves? Builders overbuilt. Many CEOs of many public builders have admitted that outright. And many lending arms of those very same builders jumped on the bandwagon of certain risky loans, which only fueled artificial demand and pumped the market even more. So now they’re taking their lumps as the market corrects. I just don’t see why that’s Congress’ fault.
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